Zimbabwe Stock Exchange-listed agro-concern, ARISTON Holdings Limited, has recorded losses despite a 23 percent growth in revenue, latest trading results show.
The company is engaged in farming operations, which include tea, macadamia nuts, horticulture, deciduous fruits, fishery and poultry.
“The Group posted a loss from operations for the period of ZWL 14.77 million, which was down 25% from the prior comparative period’s inflation-adjusted loss from operations of ZWL 19.79 million,” said chairman Alexander Crispen Jongwe, in a statement accompanying the group’s reviewed financial results for the half year ended 31 March 2020.
“Overall the group posted a loss before interest and tax of ZWL 8.96 million compared to a profit of ZWL33.49 million for the prior comparative period. The current period loss is largely driven by the fact that the ZWL revenue recognised on export crops is determined by converting the US dollars (USD) earned using the interbank rate, which lags behind inflation, whilst inflationary pressures exist on production costs, hence resulting in reported performance reflecting losses.”
Jongwe however said positive steps continued to be taken in restructuring of the group’s statement of financial position, adding their debt tenures remained largely long, however, with weighted average interest rate having increased from 6% per annum to 8% per annum.
“Revenue growth (23 percent) was driven by improved pricing achieved on macadamia due to quality improvement as well as improved local pricing of horticulture products sold during the period,” said Jongwe.
“The group’s inﬂation adjusted revenue for the half year reﬂects a 23% increase to ZWL 76.07 million from ZWL 61.82 million realised during the comparative period.”
He further said: “Costs of production increased by 47% relative to the prior comparative period as a result of local suppliers using an implied exchange rate greater than the interbank rate, thus driving costs upwards. Export revenues were, however, converted using the interbank rate. Operating expenses were kept under control despite inﬂationary pressures, reducing by 17% against the prior comparative period.”
The operating environment, Jongwe said, continued to deteriorate during the period under review.
“The rains for the 2020 agricultural year were below normal,” he bemoaned.
“Whilst the group relies extensively on its installed irrigation capacity, utilisation was adversely affected by incessant power outages experienced. Furthermore, utilisation of generators for irrigation and production processes negatively affected net margins.